KEY POINTS:
The UK and US sharemarkets continued to suffer the fallout from the drop in global share indexes this morning.
Britain's top share index, the FTSE, ended 0.9 per cent lower this morning, led by declines in British Airways shares as stocks followed the general global decline in equities.
The FTSE 100 ended down 0.94 points, or 57.5 per cent at 6,058.7, having passed below the 6,000 level in early trade and after dropping nearly 5 per cent last week.
Some 94 of the index's shares ended in negative territory, tracking Asian stocks which fell as investors fretted over an unwinding in the carry trade, or bets on riskier assets financed by borrowing the yen. The dollar and the euro both fell to three-month lows against the Japanese currency on Monday.
British Airways dropped 6.6 per cent, having plummeted as much as 10 per cent during the session after the European Union and the United States came to an agreement opening the trans-atlantic aviation market, and a newspaper reported on potential strikes at the airline's subsidiary GB Airways.
European stocks pared some losses, however, after Wall Street edged higher as some investors took the opportunity to buy beaten-down shares after last week's sell-off.
"I can't say with my hand on my heart that we're through it, but what looked, at first thing this morning, to be a pretty bad outlook, has turned around a bit," said Jeremy Batstone, head of research at Charles Stanley. "I don't think we're out of the woods," he added.
OIL SLUMPS
Oil majors BP and Shell shed 1 per cent and 0.7 per cent, respectively, as US crude oil prices fell more than a $1 to below $61 a barrel after the slide on Asian and European stock markets spilt over into commodities.
Miners were also battered, with Lonmin losing 3.1 per cent, Vedanta off 3 per cent and Antofagasta shedding 2.7 per cent as metal prices weekend.
Outperforming the index, however, Royal & Sun Alliance jumped 3.9 per cent after the insurer said it had completed the disposal of its troubled US operation to Arrowpoint Capital.
Also on the upside, HSBC, Europe's largest bank, posted results that were slightly weaker than analysts had expected, but the stock gained 1.1 per cent as its sour loan problem was milder than feared.
But other banks suffered, with Barclays falling 1.1 per cent, HBOS losing 0.5 per cent and Lloyds down 0.4 per cent.
US STOCKS
And on Wall St, US stocks were little changed this morning, as traders snapped up large-capitalisation stocks with attractive valuations, helping to limit the impact of a global exit from small caps and other riskier investments.
Large-cap and defensive stocks that fare better than other shares in times of turmoil were seen as safer bets. International Business Machines was the top positive influence on the Dow, up 1 per cent at US$91.81. Shares of drug company Merck gained 1 per cent to US$44.61. The small-cap Russell 2000 index, meanwhile, was down 0.5 per cent.
Last week's sell-off took the prospective price-to-earnings ratio on the S&P 500 index -- a measure for assigning value to stocks -- down to 14.67, nearly a seven-month low.
The Dow Jones industrial average was up 0.56 points, at 12,114.66. The Standard & Poor's 500 Index was down 4.14 points, or 0.30 per cent, at 1,383.03. The Nasdaq Composite Index was down 10.95 points, or 0.46 per cent, at 2,357.05.
"Sentiment got way too pessimistic here, so it looks like there are definitely buyers coming in. Shorts are also forced to cover a little bit here. So you have a combination of both short-covering and bargain-fishing," said Angel Mata, managing director of listed equity trading at Stifel Nicolaus Capital Markets in Baltimore.
US stocks performed relatively better than equities markets overseas.
Tokyo's Nikkei average fell 3.34 per cent, marking its biggest one-day tumble in nine months, while the FTSEurofirst 300 was down 1 per cent.
- REUTERS
